Texas 2009 - 81st Regular

Texas House Bill HB3104 Compare Versions

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1	1	81R15327 SMH-F
2	2	By: Paxton H.B. No. 3104
3	3	Substitute the following for H.B. No. 3104:
4	4	By: Oliveira C.S.H.B. No. 3104
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the ad valorem taxation of property used to provide
10	10	low-income or moderate-income housing.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 11.182, Tax Code, is amended by amending
13	13	Subsections (b), (e), (h), and (k) and adding Subsections (b-1),
14	14	(b-2), and (l) to read as follows:
15	15	(b) An organization is entitled to an exemption from
16	16	taxation of improved or unimproved real property it owns if the
17	17	organization:
18	18	(1) is organized as a community housing development
19	19	organization;
20	20	(2) meets the requirements of a charitable
21	21	organization provided by Sections 11.18(e) and (f);
22	22	(3) owns the property for the purpose of building or
23	23	repairing housing on the property to sell without profit to a
24	24	low-income or moderate-income individual or family satisfying the
25	25	organization's eligibility requirements or to rent without profit
26	26	to such an individual or family; and
27	27	(4) engages [exclusively] in the building, repair, and
28	28	sale or rental of housing as described by Subdivision (3) and
29	29	related activities.
30	30	(b-1) Notwithstanding Subsections (b)(1) and (2), an owner
31	31	of improved or unimproved real property that is not an organization
32	32	described by Subsections (b)(1) and (2) is entitled to an exemption
33	33	from taxation of the property under Subsection (b) if the owner
34	34	otherwise qualifies for the exemption and the owner is:
35	35	(1) a limited partnership of which 100 percent of the
36	36	interest of the general partner is owned or controlled by an
37	37	organization described by Subsections (b)(1) and (2); or
38	38	(2) an entity 100 percent of the interest in which is
39	39	owned or controlled by an organization described by Subsections
40	40	(b)(1) and (2).
41	41	(b-2) A reference in this section to an organization
42	42	includes a limited partnership or other entity described by
43	43	Subsection (b-1).
44	44	(e) In addition to meeting the applicable requirements of
45	45	Subsections (b) and (c), to receive an exemption under Subsection
46	46	(b) for improved real property that is [includes a housing project
47	47	constructed after December 31, 2001, and] financed with qualified
48	48	501(c)(3) bonds issued under Section 145 of the Internal Revenue
49	49	Code of 1986, tax-exempt private activity bonds subject to volume
50	50	cap, or low-income housing tax credits, the organization must:
51	51	(1) [control 100 percent of the interest in the
52	52	general partner if the project is owned by a limited partnership;
53	53	[(2)] comply with all rules of and laws administered
54	54	by the Texas Department of Housing and Community Affairs applicable
55	55	to community housing development organizations; and
56	56	(2) [(3)] submit annually to the Texas Department of
57	57	Housing and Community Affairs and to the governing body of each
58	58	taxing unit for which the project receives an exemption for the
59	59	housing project evidence demonstrating that the organization spent
60	60	an amount equal to at least 90 percent of the project's cash flow in
61	61	the preceding fiscal year as determined by the audit required by
62	62	Subsection (g), for eligible persons in the county in which the
63	63	property is located, on social, educational, or economic
64	64	development services, capital improvement projects, or rent
65	65	reduction.
66	66	(h) Subsections (d) and (e)(2) [(e)(3)] do not apply to
67	67	property owned by an organization if:
68	68	(1) the entity that provided the financing for the
69	69	acquisition or construction of the property:
70	70	(A) requires the organization to make payments in
71	71	lieu of taxes to the school district in which the property is
72	72	located; or
73	73	(B) restricts the amount of rent the organization
74	74	may charge for dwelling units on the property; or
75	75	(2) the organization has entered into an agreement
76	76	with each taxing unit for which the property receives an exemption
77	77	to spend in each tax year for the purposes provided by Subsection
78	78	(d) or (e)(2) [(e)(3)] an amount equal to the total amount of taxes
79	79	imposed on the property in the tax year preceding the year in which
80	80	the organization acquired the property.
81	81	(k) Notwithstanding Subsection (j) [of this section] and
82	82	Sections 11.43(a) and (c), an exemption under Subsection (b) or (f)
83	83	does not terminate because of a change in the ownership of the
84	84	property if:
85	85	(1) the property is:
86	86	(A) sold at a foreclosure sale; or
87	87	(B) conveyed to a related entity, including a
88	88	subsidiary or otherwise wholly owned or controlled entity, as part
89	89	of a partial or complete refinancing of indebtedness secured by the
90	90	property; and
91	91	(2) [,] not later than the 30th day after the date of
92	92	the sale or conveyance, the owner of the property submits to the
93	93	chief appraiser evidence that the property is owned by:
94	94	(A) an organization that meets the requirements
95	95	of Subsections (b)(1), (2), and (4); or
96	96	(B) a limited partnership described by
97	97	Subsection (b-1)(1) or an entity described by Subsection (b-1)(2)
98	98	that meets the requirements of Subsection (b)(4).
99	99	(l) If the owner of [the] property described by Subsection
100	100	(k) submits the evidence required by Subdivision (2) of that [this]
101	101	subsection, the exemption under Subsection (b) or (f) continues to
102	102	apply to the property for the remainder of the current tax year and
103	103	for subsequent tax years until the owner ceases to qualify the
104	104	property for the exemption. This subsection does not prohibit the
105	105	chief appraiser from requiring the owner to file a new application
106	106	to confirm the owner's current qualification for the exemption as
107	107	provided by Section 11.43(c).
108	108	SECTION 2. Section 11.1826, Tax Code, is amended by
109	109	amending Subsections (b) and (e) and adding Subsection (c-1) to
110	110	read as follows:
111	111	(b) Property may not be exempted under Section 11.1825 for a
112	112	tax year unless the organization owning or controlling the owner of
113	113	the property has an audit prepared by an independent auditor,
114	114	licensed by this state as a certified public accountant, covering
115	115	the organization's most recent fiscal year. The audit must be
116	116	conducted in accordance with generally accepted accounting
117	117	principles. The audit must include an unqualified opinion that [on
118	118	whether]:
119	119	(1) the financial statements of the organization
120	120	present fairly, in all material respects and in conformity with
121	121	generally accepted accounting principles, the financial position,
122	122	changes in net assets, and cash flows of the organization; and
123	123	(2) the organization has complied with all of the
124	124	terms and conditions of the exemption under Section 11.1825.
125	125	(c-1) The audit is binding on the appraisal district and
126	126	constitutes proof of eligibility for, including compliance with all
127	127	statutory requirements necessary for, an exemption under Section
128	128	11.1825.
129	129	(e) Property may not be exempted under Section 11.182 for a
130	130	tax year unless the organization owning or controlling the owner of
131	131	the property complies with this section, except that the audit
132	132	required by this section must address compliance with the
133	133	requirements of Section 11.182. Subsection (c-1) applies to an
134	134	audit that addresses compliance with the requirements of Section
135	135	11.182 in the same manner as that subsection applies to an audit
136	136	that addresses compliance with the requirements of Section 11.1825.
137	137	SECTION 3. Section 11.43(c), Tax Code, is amended to read as
138	138	follows:
139	139	(c) An exemption provided by Section 11.13, 11.17, 11.18,
140	140	11.182, 11.1825, 11.183, 11.19, 11.20, 11.21, 11.22, 11.23(h), (j),
141	141	or (j-1), 11.29, 11.30, or 11.31, once allowed, need not be claimed
142	142	in subsequent years, and except as otherwise provided by Subsection
143	143	(e), the exemption applies to the property until it changes
144	144	ownership or the person's qualification for the exemption changes.
145	145	However, the chief appraiser may require a person allowed one of the
146	146	exemptions in a prior year to file a new application to confirm the
147	147	person's current qualification for the exemption by delivering a
148	148	written notice that a new application is required, accompanied by
149	149	an appropriate application form, to the person previously allowed
150	150	the exemption.
151	151	SECTION 4. Section 23.215, Tax Code, is amended to read as
152	152	follows:
153	153	Sec. 23.215. APPRAISAL OF CERTAIN NONEXEMPT PROPERTY USED
154	154	FOR LOW-INCOME OR MODERATE-INCOME HOUSING. (a) This section
155	155	applies only to real property [owned by an organization]:
156	156	(1) that includes a development, as defined by Section
157	157	2306.6702, Government Code:
158	158	(A) the dwelling units in which on the effective
159	159	date of this section were [was] rented or offered for rent to [a]
160	160	low-income or moderate-income individuals [individual] or families
161	161	[family] satisfying the [organization's] income eligibility
162	162	requirements of Subchapter DD, Chapter 2306, Government Code, and
163	163	that continue [continues] to be used for that purpose; and
164	164	(B) [(2)] that was financed under the low income
165	165	housing tax credit program under Subchapter DD, Chapter 2306,
166	166	Government Code;
167	167	(2) [(3)] that does not receive an exemption under
168	168	Section 11.182 or 11.1825; and
169	169	(3) [(4)] the owner of which has not entered into an
170	170	agreement with any taxing unit to make payments to the taxing unit
171	171	instead of taxes on the property.
172	172	(b) In appraising the property, the [The] chief appraiser
173	173	shall:
174	174	(1) estimate the gross income potential of the
175	175	property by:
176	176	(A) analyzing data on rental income of the
177	177	property for the preceding fiscal year contained in the audited
178	178	statement of income and expenses for the property provided under
179	179	Subsection (g) to the chief appraiser if the dwelling units in the
180	180	development were rented or offered for rent to individuals or
181	181	families described by Subsection (a)(1)(A) for the entire fiscal
182	182	year;
183	183	(B) analyzing the potential earnings capacity of
184	184	the property if the dwelling units in the development were not
185	185	rented or offered for rent to individuals or families described by
186	186	Subsection (a)(1)(A) during the preceding fiscal year; or
187	187	(C) if the dwelling units in the development were
188	188	rented or offered for rent to individuals or families described by
189	189	Subsection (a)(1)(A) for only part of the preceding fiscal year,
190	190	using the method prescribed by Paragraph (A) for the part of the
191	191	fiscal year in which the dwelling units were rented or offered for
192	192	rent and using the method prescribed by Paragraph (B) for the part
193	193	of the fiscal year in which the dwelling units were not rented or
194	194	offered for rent;
195	195	(2) estimate the operation and maintenance expenses of
196	196	the property by:
197	197	(A) analyzing data on operation and maintenance
198	198	expenses of the property for the preceding fiscal year contained in
199	199	the audited statement of income and expenses for the property
200	200	provided under Subsection (g) to the chief appraiser if the
201	201	dwelling units in the development were rented or offered for rent to
202	202	individuals or families described by Subsection (a)(1)(A) for the
203	203	entire fiscal year;
204	204	(B) analyzing data on operation and maintenance
205	205	expenses of comparable properties available to the chief appraiser
206	206	if the dwelling units in the development were not rented or offered
207	207	for rent to individuals or families described by Subsection
208	208	(a)(1)(A) during the preceding fiscal year; or
209	209	(C) if the dwelling units in the development were
210	210	rented or offered for rent to individuals or families described by
211	211	Subsection (a)(1)(A) for only part of the preceding fiscal year,
212	212	using the method prescribed by Paragraph (A) for the part of the
213	213	fiscal year in which the dwelling units were rented or offered for
214	214	rent and using the method prescribed by Paragraph (B) for the part
215	215	of the fiscal year in which the dwelling units were not rented or
216	216	offered for rent;
217	217	(3) determine the appropriate capitalization rate as
218	218	provided by Subsections (c) and (d); and
219	219	(4) compute the actual rental income from the property
220	220	or project the future rental income from the property by
221	221	considering the restrictions provided by Subchapter DD, Chapter
222	222	2306, Government Code, on:
223	223	(A) the income of the individuals or families to
224	224	whom the property may be rented; and
225	225	(B) the amount of rent that may be charged for the
226	226	property [appraise the property in the manner provided by Section
227	227	11.1825(q)].
228	228	(c) The chief appraiser shall appraise the property using a
229	229	capitalization rate of at least 13.5 percent, except as provided by
230	230	Subsection (d).
231	231	(d) The chief appraiser may conduct a study of sales of
232	232	comparable properties described by Subsection (a) that are located
233	233	in the appraisal district to determine the appropriate
234	234	capitalization rate to use in appraising the property. If as a
235	235	result of the study the chief appraiser determines that a
236	236	capitalization rate of less than 13.5 percent is more appropriate
237	237	for that purpose, the chief appraiser shall use that lesser rate.
238	238	(e) Not later than January 31 of each year, the appraisal
239	239	district shall give public notice in the manner determined by the
240	240	district, including by posting on the district's website if
241	241	applicable, of the capitalization rate to be used in that year to
242	242	appraise property described by Subsection (a) if that rate is a rate
243	243	of less than 13.5 percent.
244	244	(f) For purposes of determining the net operating income of
245	245	the property, the operating income of the property for the
246	246	preceding fiscal year is reduced by any disbursements made in that
247	247	fiscal year for the operation and maintenance of the property,
248	248	including disbursements for:
249	249	(1) standard property maintenance;
250	250	(2) debt service;
251	251	(3) ad valorem and franchise taxes;
252	252	(4) employee compensation;
253	253	(5) fees required by government agencies;
254	254	(6) expenses incurred in satisfaction of the
255	255	requirements of lenders, including reserve requirements;
256	256	(7) insurance; and
257	257	(8) any other justifiable expense related to the
258	258	operation and maintenance of the property.
259	259	(g) Not later than April 15 of each year, the property owner
260	260	must provide to the chief appraiser an audited statement of the
261	261	income and expenses for the property for the preceding fiscal year
262	262	that includes data on rental income and operation and maintenance
263	263	expenses for which disbursements described by Subsection (f) were
264	264	made. The chief appraiser shall use the audited statement of income
265	265	and expenses in appraising the property under this section. If the
266	266	property owner fails to timely provide the audited statement of
267	267	income and expenses, the chief appraiser shall appraise the
268	268	property in the manner provided by Section 23.012.
269	269	(h) An audited statement of income and expenses for property
270	270	provided to the chief appraiser under Subsection (g) is
271	271	confidential and not available for public inspection. The chief
272	272	appraiser may disclose information in the statement only to an
273	273	employee of the appraisal office who appraises property, except as
274	274	authorized by Subsection (i).
275	275	(i) Information made confidential by Subsection (h) may be
276	276	disclosed:
277	277	(1) in a criminal proceeding;
278	278	(2) in a hearing conducted by the appraisal review
279	279	board;
280	280	(3) on a judicial determination of good cause; or
281	281	(4) to a governmental agency, political subdivision,
282	282	or regulatory body if the disclosure is necessary or proper for the
283	283	enforcement of the laws of this or another state or of the United
284	284	States.
285	285	(j) In connection with an annual study conducted under
286	286	Section 403.302, Government Code, the value of a property described
287	287	by Subsection (a) that is selected for appraisal must be determined
288	288	in the manner required by this section.
289	289	SECTION 5. This Act applies only to ad valorem taxes imposed
290	290	for a tax year beginning on or after the effective date of this Act.
291	291	SECTION 6. This Act takes effect January 1, 2010.